Maximising Energy Efficient Development

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Governments worldwide have realised the benefits and opportunities created by energy efficient development and are implementing policy accordingly. Malaysia is no different and the nation’s leaders are putting its National Energy Efficiency Action Plan into effect.

National efficiency

Factors including population growth and a period of industrialisation leading to economic expansion have resulted in a significant increase in energy demand and usage in Malaysia. Accordingly, energy supply security and broader energy-related environmental issues must be addressed sooner rather than later. Energy efficiency (EE) offers an effective policy instrument for this and is set to become a key factor in ensuring a safe, reliable, affordable and sustainable energy system for the future.

The EE agenda is gaining traction in Malaysia and the government has taken proactive measures in rolling out initiatives that are supported with strategic policy and implementable programmes to attempt to align the country with globally recognised EE standards.

EE gaining traction

Despite significant volatility in the oil-price environment and a persistently low per barrel figure since mid-2014, policymakers continue to recognise the importance of reducing domestic energy consumption and the associated opportunities this presents for sustainable development.

Yet, the implementation of energy efficient policy requires coordination across industrial and commercial sectors. As a consequence, Malaysia’s policymakers are collaborating closely with the private sector to achieve this by introducing new energy regulations and encouraging greater efficiency by offering adoption incentives.

Increasing energy intensity

Energy intensity is one method of measuring energy efficiency in an economy, which is calculated as units of energy per unit of gross domestic product (GDP). A ratio imbalance between energy demand and GDP is indicative of an energy intensive economy and, historically, Malaysia’s energy demand growth rate has been higher than the growth rate of its GDP (fig 1.). Energy demand growth in Malaysia, especially the demand growth for electricity, has been further accelerated by the industrialisation process that has been driving economic development. The energy intensity ratio, which indicates the efficient use of energy, if less than one, has persistently been over 1 in Malaysia since the late 1990s (fig. 2).

Action plans

In order to address the country’s high energy intensity ratio and to further encourage the development of the EE agenda, the government introduced the National Energy Efficiency Master Plan (NEEMP) in 2010. An improved version, the National Energy Efficiency Action Plan (NEEAP), was proposed in January 2014. The latter was a more effective framework intended to address several barriers that prevent progress in EE. The NEEAP will be implemented over a ten-year period (2016-2025) and aims to cut energy consumption by engineering an eight per cent reduction in electricity demand.

To affect this change, the plan outlines five core thrusts that will endeavour to create a sustainable funding mechanism, optimise the use of electricity, minimise waste, ensure the effective implementation of EE initiatives, and encourage private sector institutions to support EE.

In addition to the five thrusts, the NEEAP also outlines ten specific EE programmes covering three sectors that can be grouped by design into five initiatives, including energy efficient building design, promotion of 5-Star rated appliances, and setting Minimum Energy Performance Standards (MEPS) (fig 3.).

The eight per cent reduction is estimated to save 52,233 gigawatt hours (GWh) of electricity by 2025 resulting in a projected total reduction in greenhouse gas emissions of 38 million tonnes of CO2 equivalent between 2016 and 2025. Furthermore, it is estimated that a total reduction of 88 million tonnes of CO2 equivalent will be achieved over the lifetime of the energy-efficient technologies adopted and adapted from the plan’s implementation.

Overall, the NEEAP presents a strategy for a coordinated and cost-effective implementation of energy efficiency measures, which will result in the reduction of energy consumption while encouraging economic savings for both consumers and the nation as a whole.

Final remarks

As a rapidly developing country, Malaysia’s economic growth and advancement is highly dependent on the cumulative efforts of all its sectors. As its population grows, economic development will ramp up resulting in increases in demand and consumption of energy. This directly impacts the environment due to pollution and degradation.

More than simply encouraging users to reduce their demand for electricity, the NEEAP and other EE initiatives have been formulated to also reduce Malaysia’s carbon footprint, lessen its dependence on imported fossil fuels and decrease the long-term costs of importing oil and gas. The adoption of energy efficiency initiatives, in the longer term, will assist in minimising the impact of economic development on the environment while providing valuable financial savings as energy is conserved and utilsed more responsibly.